After the turbulence and turmoil of 2020, nobody really knew how 2021 would pan out. But as we approach the end of the year, having avoided another lockdown and with things feeling a little calmer than this time last year, the market seems to be settling down once more.
We put the spotlight on Zoopla’s property market forecast for the year ahead.
Movers and shakers
Countryside, bigger gardens, home offices. 2021 certainly got us thinking about what we want from a property, so it seems. It’s predicted that over a fifth of UK households plan to move in the next 18 months as a direct result of the pandemic. From the Zoopla survey, it is clear these are most likely to be young city dwellers whose jobs have changed permanently.
The report highlights an ongoing shift in attitudes as to what we all want from our homes, which could influence housing activity and uptake in 2022. According to Zoopla, the evolution of hybrid working is the main factor in our ongoing appraisal of our housing needs.
Price predictions
The property portal’s research forecasts a +3% increase in UK house prices over the course of 2022, across a predicted 1.2 million housing transactions. Zoopla expects the fast growth price gains from 2021 to bring more sellers into the marketplace, once the new year takes hold.
The ‘artificial’ rush caused by the Chancellor’s stamp duty holiday this year, will mean that the market will naturally taper off, and is unlikely to be a scenario seen again next year. We could even see up to a 20% drop in transactions in 2022, compared to 2021.
London property
There remains a disproportionate price rise war in many parts of the UK, but London is predicted to witness the slowest rise with the forecast set to be around +2% over the year, as property prices here become more sustainable.
Despite affordability levels having improved by 10% since 2016, they remain well above the long-run average, which will help cap the price rise of properties in the highest value London boroughs, although these prices sit well above the long-run average.
The cost of borrowing
As a nation, we have become accustomed to historically low interest rates. The Bank of England base rate remains at a record low of 0.1%. We are in a situation where ‘the only way is up’ in terms of interest rates, but being that we are on the upside of the pandemic, we can assume an increase is undoubtedly on the cards in 2022. This will have a knock-on effect to mortgage rates, and could be the clincher for some on-the-fence buyers who want to secure the best mortgage deals.
Zoopla predicts that we could see rates rise to 3%. If so, these would be the highest rates seen since 2015. But even if they reached this figure, we are still talking low compared to historic lending rates. The trouble is, we have all become accustomed to exceptionally low borrowing costs. For homebuyers who have secured decent long-term fixed rates, there will be some protection from rate rises.
Rental market
Zoopla predicts that the continued undersupply of rental properties across the country is expected to support rental growth, well into 2022. As the employment market strengthens, and is met with the continued shortage of available properties, it will support and sustain rental growth.
What does 2022 hold for you?
If you are thinking of moving, or due to remortgage your property next year, then early conversations can help save hours of your time and take some of the stress away. We make mortgages easy, have a free mortgage sourcing tool, and an online face-to-face mortgage appointment schedule so you can arrange to have those early conversations with our mortgage consultant Tony, at the click of a button.